Category Archive

Much has been said about the impact of the sharing economy and the proliferation of alternate lodgings on the hotel industry, but there hasn’t been much concrete evidence to directly and undeniably support this claim. This evidence has mostly been tangential and more based on consumer behavior theory than on showing an immutable link between the growth of one and losses for the other. Recent data, however, is sobering. Bank of America Consumer Spending Snapshot tracks the utilization of 40 million credit and debit card users, sorted by industry (SIC code). By examining longer term data – in this case seven continuous quarters – we can start to visualize trends that properly illustrate the causality we hoteliers have long purported. Below are four charts revealing slightly different perspectives on the same comparison. This first chart looks at the change in expenditures for the home sharing and hotel segments. As you …

Let’s get the acronyms out of the way so there’s no confusion: RevPAR = Revenue Per Available Room RevPOR = Revenue Per Occupied Room RevPAG = Revenue Per Available Guest The first term, RevPAR, is the most commonly used these days, but as I’ve advocated before, it may not be the best overall indicator of a property’s financial or business health. Hence, I vouched for using the second term, RevPOR, as it incorporated occupancy percentages to better forecast actualized revenues instead of projecting a figure based on 100% rooms booked. It’s a subtle change, but one that can nonetheless have a tremendous impact when evaluating quarter-over-quarter or year-over-year. Even though most diligent managers will throw RevPAR through an average or ‘per capita’ occupancy grinder for a more accurate calculation of earnings, it is still hard to account for seasonal disruptions. That’s where RevPOR shines through; by factoring occupancy into the …

On the evening of June 1, 2009, Air France Flight 447 departed Rio de Janeiro to Paris. The flight started off normally. Then, somewhere over the Atlantic Ocean came trouble. At the controls, the flight crew diligently monitored their instruments, as the aircraft tumbled through the darkness into the water. Some 228 passengers and crew died tragically. It took some two years until the flight wreckage was discovered. To summarize what happened, the black box recorders specified that the instruments were not displaying the aircraft’s real situation, which led the crew to react incorrectly. Was it possible that this tragedy could have been avoided? Was pilot error to blame? While instrumentation error was identified, could an expert pilot have flown the craft contrary to what his dashboard was indicating based on experience and trained sensory recognition? I am not a pilot and, apart from spending about 50 days a year …

When it comes to the terms RevPAR and RevPOR, RevPAR (revenue per available room) gets most of the attention. And it better, because it’s incredibly important for hotel operations and management. But RevPOR (revenue per occupied room) is equally important. In essence, it combines the metrics of RevPAR and occupancy into a “per capita” number, and when compared quarter-over-quarter or year-over-year, it can reveal some extraordinary guest insights. It’s best to illustrate this through an example: the traditional North American low season (excluding sun destinations) of January through March. It’s customary to witness a sizeable drop in occupancy during this time, which would subsequently lower RevPAR. However, because RevPOR assumes occupancy as static, it is a better barometer of changing patterns in how much guests are spending. Suppose during this low season you notice a jump in RevPOR for this year over last. This would be a good indicator that …

Do your guests know what “BAR” stands for? Not likely. Unless they have worked or are presently working in the hotel industry, chances are correctly expanding that acronym out to “best available rate” isn’t snap-your-fingers knowledge, nor is its implied meaning. In its simplest terms, BAR ensures that the low prices for nightly room rates on third-party suppliers will be matched by the hotel when the consumer contacts the hotel with “parity” in mind. This BAR, also known as best rate guarantee, is adeptly used by revenue managers worldwide to incentivize guests to make their reservations directly through the brand.com booking engine as opposed to the OTAs. I’m preaching to the choir on the definition. However, BAR should also be a primary tool put forward by your sales team and marketers, not just something stowed away in the aft section of your website. The advantages to booking through your brand.com …

A press release caught my eye last week. It was from one of the “flash sale” companies. (For those of you not familiar with the terminology, flash sales are web-based programs that offer a very deep discount for a limited time period.) I can’t remember which one, not because of my age, but because they all appear to be the same insofar as their attitude and consumer positioning. The press release extolled the fact that an AAA 5-Diamond rated resort had utilized their services, and in doing so, they were claiming to the world some form of bona fide for their efficacy as a luxury marketer. Interesting, I thought! Has it come to this, with luxury properties needing a quick dose of occupancy, like some sort of drug-induced high? I understand the strategic rationale of a trial strategy. My old bosses at Procter & Gamble, a marketing-oriented, packaged-goods firm of …

You see them on sites like Jetsetters, Living Social Escapes, Hotel Tonight, Groupon and several others: “Deluxe Vacation in Paradise, Regularly $2,000, Book Now for Only $1,000, Save 50%.” The promotional text is crisp; the offers relatively straightforward. The question is, should you as a hotelier participate in these programs? And importantly, what role will flash sales play in 2012? Flash Sales: What Are They All About? A flash sale is defined as an internet-based promotion that is offered to potential guests for an extremely short period of time (one to seven days). The offer is typically for an inventory-restrictive packaged program available over a specified time period and priced at a discount significantly below BAR. As well, most flash sales require full payment at time of booking. Once purchased, they are generally non-cancellable, and may also be non-transferrable. A Customer Survey As you would expect, consumers love a sale. …

Pricing strategies are becoming exponentially complex given the diverse array of channels to sell your product as well as the rapid pace of our Internet-driven society. Revenue Managers (RM) will work in tandem with the GM and Director of Marketing to coordinate the best room rates and promotional deals, as well as properly segment your group sales tiers from what you might offer FIT customers through the OTAs or flash sales. It’s a very numbers rigorous job and a good RM is an indispensible commodity for your hotel. Keep in mind that due to the required skill set, it’s very hard to mold the RM’s duties into another job position and in doing so, you’ll jeopardize the efficacy of your overall pricing strategy.

When I started in the hotel marketing business, the role of revenue manager did not exist. We were all neophytes to the concepts of channel strategy and yield management. Ask a senior marketing director about pricing, and they would refer you to seasonal or weekend promotions. I can even remember the time when the Inn on the Park in London had one price for each room type, independent of the day of the week or month. The only exceptions were for groups and high-volume customers. The evolution of the Revenue Manager position has solved many of these earlier pricing inefficiencies, but has left a dearth of areas that still need improvement. Computer Wizardry Times have certainly changed. The sheer range of prices offered to a property’s channel partners is daunting enough for anyone short of a post-secondary education in finance. At the same time, PMS tools now allow us to …

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